A coalition of cable and satellite companies — including Time Warner Cable, DirecTV, and Verizon — may have opened a Pandora’s box late Tuesday when they asked the Federal Communications Commission to weaken the ability of TV stations to negotiate contract disputes.
The group wants to stop broadcasters, who see ad sales waning, from insisting on big payments for retransmission rights to the widely watched shows on ABC, CBS, Fox, and NBC. The petition says that Sunday’s 21-hour blackout of ABC programming on most Cablevision systems — the result of a breakdown in talks over ABC’s effort to charge a fee for WABC in New York and WPIV in Philadelphia — is “just the beginning of a larger problem that will continue to escalate.”
The next big battle could take place in August, when Time Warner Cable’s carriage agreement for WABC expires.
Research firm SNL Kagan predicts that payments from cable and satellite will account for 9% of the $21.7 billion in revenues that TV stations will generate in 2013, up from 1% of $24.6 billion in 2006.
To stop broadcasters from flexing their muscles, the coalition asked the FCC to mandate that disputes be settled by an arbitrator. They also want regulators to bar stations from withholding their programming, their most potent bargaining chip.
At root, the group says, negotiations between stations and distributors in cable and satellite operate in “a wholly artificial construct that has little in common with an actual marketplace.”
The National Association of Broadcasters responded that changes to “the free-market based retransmission consent model could be the demise of local programming.”
They add that it doesn’t make sense to have a system in which cable and satellite companies pay channels such as Time Warner’s TNT about $1 a month for each subscriber, but fight efforts by the far more popular broadcast networks to collect half as much.
Conspicuously missing from this fight is Comcast. The largest cable operator has a foot in both camps as it lobbies federal regulators to approve its deal to take a controlling stake in NBC Universal.
Still, the spat between some of the media world’s biggest powers promises to be a lot of fun for people who enjoy this sort of thing.
But it could backfire on cable and satellite companies if regulators see this as an opportunity to explore the vast, complicated, and often foul-smelling world of programming carriage deals. For example, backers of independent channels such as Wealth TV have long complained that it’s virtually impossible to get carried on cable without giving operators a piece of the action.
The FCC could easily decide that it’s time for a la carte – giving cable and satellite customers the flexibility to just pay for the channels that they want.
As they like to say on TV, stay tuned.
Grab the 3D glasses, here comes an ad
National CineMedia, the largest seller of the ads that appear on movie theater screens, told Wall Street analysts on Monday to watch for some news about the introduction of sales pitches in 3D.
“We are working with several clients on the idea of 3D advertising,” CEO Kurt Hall said.
The company also wants to bring 3D to events, such as concerts and sports matches, that can appear in movie theaters. The problem is that it will be hard to get access to the limited number of projectors; most will be taken by the flood of 3D films coming this year from Hollywood.